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In this work, a high-performance Mg-8.4Gd-4.4Li-3.5Y-1.4Zn (wt%) alloy was successfully prepared by low-temperature hot extrusion. The studied alloy has a TYS of 295 ± 1 MPa and an EL of 2.5 %±0.2 % at room temperature, 159 ± 8 MPa and 15.9 %±1.4 % at 150 °C, and 143 ± 4 MPa and 19.8 %±1.8 % at 200 °C. The high performance at temperatures up to 200 °C is attributed to the dispersion strengthening of three Mg3RE phase variants, the solid solution strengthening of alloying elements and the bimodal structure consisting of fine DRXed grains with random texture and coarse un-DRXed grains with basal texture. A novel island shaped β 1 R phase (FCC, a = 0.78 nm) with a size of 30 nm–100 nm is observed in the studied alloy. The β 1 R phase precipitates on the { 1 1 ¯ 00 } α prismatic planes. The strain-induced, dislocation-assisted dynamic precipitation during low-temperature hot extrusion is responsible for the formation of the β 1 R phase. The growth of the β 1 R phase is owing to the aid of the formation and transformation of zig-zag structures. The basal slip of dislocations is the dominate deformation mechanism of the studied alloy in the early stage of tensile deformation at room temperature, while non-basal slip of and dislocations at 200 °C. Due to the strong interaction between β 1 R precipitates and dislocations, the densely distributed β 1 R precipitates significantly improve the mechanical properties via the Orowan strengthening both at room temperature and elevated temperatures.